Vaughan v. Stephens Media LLC et al

Filing 21

ORDER Denying 6 Motion to Remand to State Court and Denying 19 Motion to Consider 6 MOTION to Remand to State Court as Conceded. Signed by Judge James C. Mahan on 7/9/12. (Copies have been distributed pursuant to the NEF - MMM) Modified to include reference to denial of 19 Motion on 7/9/2012. (ASB)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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2:12-CV-904 JCM (VCF)

STAN VAUGHAN,
Plaintiff,
v.
STEPHENS MEDIA LLC, et al.,

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Defendants.

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ORDER

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Presently before the court is pro se plaintiff Stan Vaughan’s motion to remand this action to

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state court. Doc. #6. Defendants Stephens Media, LLC (“Stephens Media”), Bryan Cave LLP

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(“Bryan Cave”), and World Chess Museum, Inc., d/b/a World Chess Hall of Fame (“WCHOF”),

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have filed an opposition (doc. #15),1 to which plaintiff has replied (doc. #17).

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Background

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WCHOF filed a suit against plaintiff on January 17, 2012, in the United States District Court

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for the Eastern District of Missouri, alleging trademark infringement pursuant to the Lanham Act.

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After several failed attempts to serve plaintiff in the Missouri suit, the presiding judge, the Honorable

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Carol E. Jackson, granted WCHOF’s motion for service by publication. On April 10,17, 24 and May

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1, 2012, Stephens Media, d/b/a the Las Vegas Review-Journal, published the summons. Service on

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plaintiff became effective on May 9, 2012.

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James C. Mahan
U.S. District Judge

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Plaintiff has also recently filed a motion seeking a court order requesting that the court find
that defendants have conceded to remand. Doc. #19. The court will deny this motion.

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On April 30, 2012, prior to service becoming effective, plaintiff filed a complaint in Eighth

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Judicial District, Clark County District Court for the State of Nevada, alleging: (1) trademark

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infringement under N.R.S. Chapter 600; (2) unfair competition and false design under N.R.S.

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Chapter 598A; (3) statutory and common law trademark infringement and unfair competition; and

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(4) trademark dilution against defendants.

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Plaintiff also seeks declaratory judgment that his trademark does not infringe on WCHOF’s

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federally registered trademark and that he should prevail in the Missouri action. On May 29, 2012,

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defendants removed the instant action to the United States District Court for the District of Nevada.

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Plaintiff subsequently moved to remand. For the following reasons the court denies the motion.

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Discussion

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An action filed in state court may be removed to federal court if the federal court would have

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had original subject matter jurisdiction over the action. 28 U.S.C. § 1441(a). This court has original

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subject matter jurisdiction over two types of cases. First, pursuant to 28 U.S.C. § 1331, this court has

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federal question jurisdiction over “all civil actions arising under the Constitution, laws, or treaties

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of the United States.” Second, pursuant to its diversity jurisdiction, the court may preside over suits

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between citizens of different states where the amount in controversy exceeds to sum or value of

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$75,000. 28 U.S.C. § 1332(a). Where the complaint does not establish the amount in controversy,

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“the removing defendant bears the burden of establishing, by a preponderance of the evidence, that

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the amount in controversy exceeds [$75,000].” Sanchez v. Monumental Life Ins. Co., 102 F.3d 398,

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404 (9th Cir. 1996); Guglielmino v. McKee Foods Corp., 506 F.3d 696, 701 (9th Cir. 2007).

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Pursuant to the forum defendant rule, removal on the basis of diversity jurisdiction is

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confined to “instances where no defendant is a citizen of the forum state.” 28 U.S.C. § 1441(b); see

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also Lively v. Wild Oats Markets, Inc., 456 F.3d 933, 939 (9th Cir. 2006). The removal statutes are

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construed restrictively, and doubts regarding the viability of removal are resolved in favor of

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remanding the case to state court. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09

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(1941); see also Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

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James C. Mahan
U.S. District Judge

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Plaintiff claims that there is no diversity jurisdiction because defendant Stephens Media is
a citizen of Nevada and the amount in controversy does not exceed $75,000.

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a. Diversity of Citizenship

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Plaintiff first claims that defendant Stephens Media is a citizen of Nevada and therefore,

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destroys diversity. In Johnson v. Columbia Props. Anchorage, LP, the Ninth Circuit followed the

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Supreme Court decision in Great S. Fire Proof Hotel v. Jones, and refused to extend corporation

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citizenship rules to non-corporate entities. Johnson v. Columbia Props. Anchorage, LP, 437 F.3d

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894, 899 (9th Cir. 2006). The Ninth Circuit held that an LLC is a citizen of every state of which its

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owners/members are citizens. Id.

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Here, plaintiff claims that Stephens Media is a citizen of Nevada because its principal place

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of business is in Nevada. However, as a limited liability company, Stephens Media’s citizenship is

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determined by the citizenship of its members. See Johnson, 437 F.3d at 899. Stephens Media has

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only two members: SF Holding Corporation and Stephens Holding Company. Both SF Holding

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Corporation and Stephens Holding Company are corporate entities.

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A corporation is a citizen of: (1) the state where its principle place of business is located; and

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(2) the state in which it is incorporated. Johnson, 437 F.3d at 899 (citing 28 U.S.C. § 1332(c)(1)).

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As both SF Holding Corporation and Stephens Holding Company are organized under the laws of

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Arkansas and have their principal place of business in Arkansas, they are citizens of Arkansas. See

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Id. Therefore, Stephens Media is also a citizen of Arkansas. See id.

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b. Amount in Controversy

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Plaintiff represents that the amount at issue in the instant action exceeds $10,000 but is less

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than $75,000. See Mot. Remand at 6. The plaintiff does not state in the complaint the amount in

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controversy.

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In Guglielmino v. McKee Foods Corp., the Ninth Circuit held that where a “complaint is

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unclear and does not specify ‘a total amount in controversy,’ . . . proof by a preponderance of the

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evidence” is the appropriate burden of proof to employ. Guglielmino v. McKee Foods Corp., 506

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F.3d 696, 701 (9th Cir. 2007). Accordingly, the defendants must provide evidence establishing that

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James C. Mahan
U.S. District Judge

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it is more likely than not that the amount in controversy is over $75,000. Id.

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Here, the plaintiff has pled that the amount in controversy “while exceeding $10,000, does

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not exceed $75,000, exclusive of interest and costs.” Compl. ¶ 7. Such an allegation is similar to the

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allegation in the Guglielmino, where the plaintiff alleged a “sum . . . less than $75,000” excluding

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only “interest and costs.” Guglielmino, 506 F.3d at 700. Accordingly, the instant complaint is

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unclear, and pursuant to the holding of Guglielmino, the defendants must establish by a

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preponderance of the evidence that the jurisdictional threshold his met. Id. at 701.

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Defendants point to a demand letter sent by plaintiff, wherein he valued his compensatory

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claims at $50,001. Further, plaintiff requests exemplary damages in an amount of “three times the

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amount found as actual damages,” in his complaint. Thus, taken together, plaintiff’s total damages

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are $150,003.

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As explained above, the instant complaint does not disclose a total dollar amount for

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plaintiff’s claims. Several circuits, including the Ninth Circuit have held that “a settlement letter is

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relevant evidence of the amount in controversy if it appears to reflect a reasonable estimate of the

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plaintiff’s claim.” Cohn v. Petsmart, Inc., 281 F.3d 837, 841 (9th Cir. 2002); see also Chase v. Shop

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‘N Save Warehouse Foods, Inc., 110 F.3d 424, 428–30 (7th Cir.1997) (plaintiff’s settlement offer

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is properly consulted in determining “plaintiff's assessment of the value of her case”); Burns v.

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Windsor Ins. Co., 31 F.3d 1092, 1097 (11th Cir.1994) (while a “settlement offer, by itself, may not

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be determinative, it counts for something”); Wilson v. Belin, 20 F.3d 644, 651 n. 8 (5th Cir.1994)

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(“Because the record contains a letter, which plaintiff's counsel sent to defendants stating that the

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amount in controversy exceeded $50,000, it is ‘apparent’ that removal was proper.”).

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Here, plaintiff has not argued that the demand in his letter was inflated and not an honest

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assessment of damages. Cohn, 281 F.3d at 841. He has made no attempt to disavow his letter or offer

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contrary evidence. Id. Rather, plaintiff simply reiterates the jurisdictional allegation in his complaint

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and argues the court is bound by the statement that damages “exceed[] $10,000 [but] do[] not exceed

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...

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...

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James C. Mahan
U.S. District Judge

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$75,000.” In light of the record before the court, it finds that defendants have proven, by a

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preponderance of the evidence, that the jurisdictional amount is met. See Guglielmino, 506 F.3d at

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700.

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that plaintiff’s motion to

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remand (doc. #6) be, and the same hereby is, DENIED.
DATED July 9, 2012.

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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge

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